Correlation Between Morningstar Unconstrained and Crdit Agricole

Can any of the company-specific risk be diversified away by investing in both Morningstar Unconstrained and Crdit Agricole at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Morningstar Unconstrained and Crdit Agricole into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Morningstar Unconstrained Allocation and Crdit Agricole SA, you can compare the effects of market volatilities on Morningstar Unconstrained and Crdit Agricole and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Morningstar Unconstrained with a short position of Crdit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morningstar Unconstrained and Crdit Agricole.

Diversification Opportunities for Morningstar Unconstrained and Crdit Agricole

0.66

Correlation Coefficient

Morningstar Unconstrained  Crdit Agricole

Poor diversification

The 3 months correlation between Morningstar and Crdit is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Morningstar Unconstrained Allo and Crdit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdit Agricole SA and Morningstar Unconstrained is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Morningstar Unconstrained Allocation are associated (or correlated) with Crdit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdit Agricole SA has no effect on the direction of Morningstar Unconstrained i.e., Morningstar Unconstrained and Crdit Agricole go up and down completely randomly.

Pair Corralation between Morningstar Unconstrained and Crdit Agricole

Assuming the 90 days horizon Morningstar Unconstrained is expected to generate 4.34 times less return on investment than Crdit Agricole. But when comparing it to its historical volatility, Morningstar Unconstrained Allocation is 2.47 times less risky than Crdit Agricole. It trades about 0.17 of its potential returns per unit of risk. Crdit Agricole SA is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,303  in Crdit Agricole SA on February 18, 2024 and sell it today you would earn a total of  425.00  from holding Crdit Agricole SA or generate 32.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Morningstar Unconstrained Allo  vs.  Crdit Agricole SA

Morningstar Unconstrained

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morningstar Unconstrained Allocation are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Morningstar Unconstrained may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Crdit Agricole SA

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Crdit Agricole SA are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Crdit Agricole reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morningstar Unconstrained and Crdit Agricole

The main advantage of trading using opposite Morningstar Unconstrained and Crdit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morningstar Unconstrained position performs unexpectedly, Crdit Agricole can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Crdit Agricole will offset losses from the drop in Crdit Agricole's long position.

The idea behind Morningstar Unconstrained Allocation and Crdit Agricole SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.